Mortgage Reforms Announced by the Government of Canada

The Government of Canada has implemented significant mortgage reforms aimed at increasing accessibility and affordability in homeownership for Canadians.

Starting November 21, homeowners looking to switch lenders at mortgage renewal will no longer need to go through the stress test. This move aims to simplify the renewal process for those with uninsured mortgages.

Previously, even a simple switch required borrowers to prove they could handle payments at a rate 2% higher than their new mortgage rate. While insured mortgages were already exempt, this change now offers uninsured borrowers the same flexibility. You’ll still need to qualify for the mortgage, but now you can do so at the contract rate instead of the higher stress test rate.

Beginning December 15, 2024, the insured mortgage cap will rise from $1 million to $1.5 million — the first increase since 2012! This adjustment reflects today’s housing market, enabling more Canadians to qualify for a mortgage with a down payment of less than 20%.

Also effective December 15, 2024, first-time homebuyers and purchasers of new-build properties will become eligible for 30-year mortgage amortizations on insured mortgages, an increase from the previous 25-year cap. This extended amortization period aims to enhance housing affordability by reducing monthly mortgage payments. Additionally, the change is expected to stimulate new home construction, contributing to efforts to address the ongoing housing shortage.

RRSP Home Buyer’s Plan: The limit was raised from $35,000 to $60,000, offering Canadians more flexibility when using their savings for a home purchase.

Effective January 15, 2025, the federal government has introduced new measures to encourage the construction of secondary suites, to address housing shortages. Under these provisions, homeowners looking to add up to three secondary units, such as laneway homes or basement suites, will be permitted to refinance up to 90% of their property’s appraised value, inclusive of the added suite’s value. These mortgages will also qualify for an extended 30-year amortization.

Let’s chat about how these reforms could benefit you. Feel free to contact us for a free, no-obligation consultation.